A fixed-income instrument is a contract between a borrower and an issuer to exchange cash flows in a predetermined and periodic (fixed) time frame. Cash flows at each period in time may be variable. Traditional securities of fixed income include loans, notes, bills and bonds. Non-traditional securities include interest rate derivatives, inflation derivatives, and credit derivatives.

Modeling tools are often used for determining the price, yield, and cash flow for many types of fixed-income securities, including mortgage-backed securities, corporate bonds, treasury bonds, municipal bonds, certificates of deposit, and treasury bills.

Common techniques for modeling and analyzing fixed-income instruments and markets include:

- Fitting yield curves to market data using parametric fitting models and bootstrapping
- Calculating the price, rates, and sensitivities for interest rate swaps
- Pricing and valuing other derivatives, including credit default swaps, bond futures, and convertible bond.

For more information about modeling fixed income, see Financial Instruments Toolbox™.

- Fitting Interest Rate Curve Functions to Data of Fixed Income (Example)
- Bootstrapping a Swap Curve (Example)
- Modeling the U.S. Yield Curve Using a Diebold Li Model (Example)
- Pricing Mortgage Backed Securities Using the Black-Derman-Toy Model (Example)

- Bootstrap Interest-Rate Curves from Fixed-Income Market Data (Documentation)
- Model Mortgage-Backed Securities (Functions)
- Pricing and Valuation of Credit Default Swaps 4:21 (Video)
- Price Interest-Rate Derivatives Using Tree Models (Documentation)

*See also*: *credit risk*, *financial derivatives*, *zero curve*, *swap curve*, *Financial Toolbox*, *Financial Derivatives Toolbox*